The three companies have major potash operations in Saskatchewan, which has one of the world’s largest deposits of the mineral.
SERGEI KARPUKHIN / REUTERS
The breakup of the biggest player in the global potash market, a Russian-Belarusian joint venture, sent a shockwave through shares of European potash miners.
The potash sector took a major hit Tuesday amid fears that producers in Saskatchewan would be undercut by lower prices after a key rival in Russia pulled out of a cartel.
Uralkali, one of the world’s largest potash producers said it has decided to stop its export sales through the Belarusian Potash Company and direct all export volumes through its own Uralkali Trading.
Experts interpreted the breakup of the European potash cartel as a sign that Uralkali will be able to drive down the price of potash by as much as 25 per cent, affecting other rival producers in Canada and the United States.
PotashCorp is the largest and best-known of North America’s potash producers and the largest partner of Canpotex, a company set up to market the products of PotashCorp, U.S.-based Mosaic and Agrium in export markets such as China.
The three North American companies all have major potash operations in Saskatchewan, which has one of the world’s largest deposits of the mineral — a main ingredient used in fertilizers used to promote crop growth.
The mineral is key to that province’s economy, and the suggestion of a possible slide in that market raised questions about what impact may be felt by Saskatchewan or even the Canadian economy as a whole.
A spokesperson for Uralkali said Tuesday that the company expected competition on the potash market to increase once the firm starts selling through its own trader and working at full capacity, and that should put pressure on the price to possibly go to under $300 (U.S.) per tonne by the end of 2013.
“Still, the price is likely to remain higher than $200 per tonne, which is the cost of production for marginal potash producers,” the company said in an e-mail.
The CEO at Uralkali said in a statement posted on the company’s website that the Russian company has supported a united sales network but that has been upset by a Belarusian presidential decree in December and sales by Belaruskali outside the marketing partnership.
“Unfortunately, we should state that our co-operation with our Belarusian partners within BPC framework has come to a deadlock,” Vladislav Baumgertner said in a statement.
He said Uralkali had “repeatedly informed” its Belarusian partners that such actions “were unacceptable and they have ultimately destroyed the fundamentals of our prolonged fruitful co-operation.”
“In this situation we have to re-direct our export deliveries through our own trader,” he said, adding he wouldn’t exclude the possibility of co-operation on a mutually beneficial basis in future.
Potash: Shares of major North American potash producers fall | Toronto Star
Link: http://www.thestar.com/business/personal_finance/investing/2013/07/30/potash_shares_of_major_north_american_potash_producers_fall.html
